Silicon Insider: Meet the MacIntel

Jan. 12, 2005 — -- Nothing like a common enemy to get two long-frustrated corporate lovers to finally jump in bed together…

As you might have read, the big news to come out of this week's annual MacWorld Expo in San Francisco, long the occasion for Apple Computer to announce new products, was the word that the company would start selling new desktop and laptop computers using Intel processors -- immediately. In other words, six months earlier than Apple had predicted just last June.

The news took even the army of the ever-awestruck Macolytes by surprise. Better yet, as Apple CEO Steve Jobs was pleased to announce to the crowd, these new Intel-based computers, including the horribly named MacBook Pro laptop, will be "screamers," thanks to their use of the latest Intel dual-core processors. The more expensive laptop, for example, will blast along at 1.83 GHz, a rate made even faster thanks to Apple's superior operating system. All in all, the new Apple/Intels will run several times faster than their Apple/PowerPC predecessors.

Intel's CEO, Paul Otellini, was apparently so excited by the announcement that he willingly became the latest Steve Jobs stage prop, coming on stage dressed head-to-toe in a clean-room "bunny suit" -- certainly a proud moment for Intel employees everywhere.

Nevertheless, Otellini did have reason to be pleased: For 20 years, Intel has been both the greatest beneficiary and the biggest victim of the "Wintel" revolution in PCs. By providing the processor of choice for the original IBM PC and all that followed, Intel, until then a troubled company fighting to stay ahead of Motorola and others, suddenly was catapulted to the pinnacle of the high-tech world. It became the most valued, and at times the most valuable, high-tech company on the planet.

But with that success came a straitjacket: Microsoft. For two decades now, Intel has struggled to free itself from the burden of propping up the ever-more kludgy Windows operating system. It killed Intel designers to realize that almost all of the new power they were putting into each new generation of Pentiums and beyond was largely being burned up supporting an obsolete OS and helping line Bill Gates' very large pockets.

That's why, during the Sculley era at Apple, Andy Grove, Intel's mighty CEO, humbled himself and drove over to Apple for audience with Pepsi John -- ultimately, for nothing. And that's why Intel has always made nice to Apple, even when most other Valley companies have despised the place.

On Apple's part, as I noted before, the use of anything-but-Intel processors was due to Jobs' duplicity, Apple's Original Sin, dating back to the very first hours of the company. But, to Jobs' credit, he knew he had made a near-fatal mistake. … And like Grove himself, Jobs had the rare courage among CEOs to admit that he was wrong.

Still, making the decision to jump from the PowerPC processor, a Motorola design that had in recent years been produced by IBM and the Moto spinoff Freescale Semiconductors, was comparatively easy. For one thing, there wasn't enough Kool-Aid in the world for Apple fanatics to drink that would convince them that the PowerPC was a superior chip.

And, as I've noted before, Apple is the most totalitarian of Silicon Valley companies: It's secretive to the point of crushing free speech, viciously closed in an open-systems world, and obsessed with a personality cult surrounding its founder/CEO. And as with all such regimes, true believers grow adept at switching their most deeply held beliefs at the command of the party chairman. Thus, a decade ago, the rabid hatred that Macolytes felt toward their Satan, Bill Gates, evaporated in an instant when he appeared on-screen at an event behind a beaming Chairman Steve. Compared to that, the jump from Bad Intel to Good Intel was the matter of a moment, and without a second thought.

What is curious about this week's announcement is just how quickly Apple implanted Intel chips into a new product family. It seems almost superhuman -- and thus a little suspect. I am reminded of the last time Apple seemed to accomplish something beyond the laws of human endeavor. That was the apparently apocryphal creation of Apple's original Lisa/Macintosh windows-type operating system. As the myth goes, Steve Jobs walked into Xerox PARC, saw this amazing new kind of operating software on some prototype personal computers, and had an epiphany. Being the endearing Pirate of Silicon Valley he was, Jobs decided to "borrow" the idea. He went back to Apple and ordered his team to get to work on it.

Literally weeks later, the team handed back to Jobs the legendary Apple OS. It was a superhuman achievement, accomplished by code-writing geniuses inspired by a charismatic leader.

Unfortunately, the story is likely false. As one of those team members, Jef Raskin, explained to me years later, it was he who had been visiting at Xerox PARC and spotted the new operating system design. He, in turn, brought in the rest of the team to take a look -- and, needless to say, they were stunned and convinced that it belonged on the new Apple computer. The problem, they all agreed, was Jobs, who didn't like anything he hadn't discovered himself.

So, the alternative story goes, team members conspired to have Jobs visit Xerox PARC, "discover" the new Operating System, and then order them to duplicate it. Needless to say, they were already hard at work writing the code so when Jobs fell for their scam, they merely had to touch up a few details and deliver the final product. Even after the truth came out, the myth continued to hold sway. Tellingly, it is far better for Apple to portray (and Macolytes to believe in) Steve Jobs as a clever thief, a Robin Hood of the Digital Age, than as the dupe of his subordinates.

Thus, the timing of this announcement makes me suspect that there is more to the story than a bunch of overworked designers spending weekends and holidays laboring to cut the design cycle of the new MacIntels in half. Someday we'll know the real story, probably about some secret skunk works at Apple or Intel that spent the last two years jump-starting the process.

But whatever the real story, this new marriage between Intel and Apple is very good news indeed, for it finally brings together the best processor with the best operating system, inside the best PC packaging. And that has to be cause for rejoicing. Apple may have the soul of a police state -- but unlike, say, the Soviet Union, Steve Jobs actually delivers. The iMacs, good or bad, have never been less than interesting. And sometimes they have been magnificent. The Mac OSX is so superior to Windows that you want to weep sometimes over how much the world has lost in the last 20 years. And, of course, the iPod is a work of genius, the defining product of our time.

Yet, for all of the good news, it is interesting to speculate whether this marriage was really conceived out of love … or if, in fact, it was a shotgun wedding.

About this time last year, I was working on a magazine article about Intel and meeting with senior company executives. Over dinner one night the conversation turned to the company's competition. Like most people, I assumed that Intel still saw its greatest threat in IBM and Advanced Micro Devices.

But I was wrong. Instead, these Intel executives, with real fear in their eyes, named a company I would never have thought of: Samsung.

Samsung scares Intel to death -- and the news of the last few months only underscores that Intel has good reason to be worried.

We don't think much about Samsung here in the United States beyond that it is a South Korean conglomerate that makes cheap TVs. But the reality is that Samsung currently has a market valuation of $100 billion, making it one of only four Asian companies to reach this size. It is bigger than Nokia and Sony. And it is rapidly becoming the dominant player in everything from flat-panel displays to game chips to cell phones.

Most tellingly, the only time they competed directly, Samsung kicked Intel's butt in flash memory for wireless, a market Intel assumed it owned. Finally, with more than $2 billion in quarterly profits, Samsung has got a very big war chest.

What scares Intel the most is that Samsung is not only frighteningly like Intel itself -- smart, disciplined, relentless -- but that it is also sitting at the epicenter of the most important consumer electronics market on the planet, while Intel is thousands of miles away in a different culture, speaking a different language. Thus, hooking up with Apple not only enables Intel to consolidate its ownership of the PC world, but puts it in the back pocket of the most innovative consumer electronics company on this side of the Pacific.

And Apple? In all of the excitement about the MacIntel announcement, you may have missed the news that Samsung is preparing to enter the MP3 player market -- that is, it's going after the iPod. Right now, the trade press is reacting with amusement (and the mainstream media haven't even noticed). But, as Otellini, in his bunny suit, may have whispered backstage to Steve Jobs: "Don't underestimate Samsung."

This work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Michael S. Malone, once called the Boswell of Silicon Valley, is one of the nation's best-known technology writers. He has covered Silicon Valley and high-tech for more than 25 years, beginning with the San Jose Mercury-News, as the nation's first daily high-tech reporter. His articles and editorials have appeared in such publications as The Wall Street Journal, the Economist and Fortune, and for two years he was a columnist for The New York Times. He was editor of Forbes ASAP, the world's largest-circulation business-tech magazine, at the height of the dot-com boom. Malone is best-known as the author or co-author of a dozen books, notably the best-selling "Virtual Corporation." Malone has also hosted three public-television interview series, and most recently was co-producer of the celebrated PBS miniseries on social entrepreneurs, "The New Heroes." He has been the ABCNEWS.com "Silicon Insider" columnist since 2000.